New Report by Anderson Economic Group Analyzes Economic Impact of Invasive Species on Businesses in the Great Lakes

LANSING, Mich. | May 29, 2012

Aquatic invasive Species (AIS), cost businesses and consumers in the Great Lakes region hundreds of millions of dollars annually in direct costs and even more from indirect costs related to removal, maintenance and management of those species. Meanwhile, state and federal governments are currently forced to spend additional millions as they attempt to control the impacts and prevent the spread of AIS, according to a new report by Anderson Economic Group (AEG), commissioned and released by The Nature Conservancy today.

The industries most affected by AIS include sport and commercial fishing, water treatment, power generation and tourism. Together, these industries employ more than 125,000 workers in the Great Lakes region.

The report details the many ways AIS impose economic costs in the Great Lakes region and it puts into context the scale of the impact on several industries directly affected by AIS. For example, the cost of controlling zebra mussels at one water treatment facility is approximately $353,000 annually.

“Some may think that $353,000 doesn’t sound like much in the larger context of business costs, but when you consider that we have 381 water treatment facilities across the basin, those numbers add up quickly,” said Alex Rosaen, consultant at Anderson Economic Group, and the primary author of the report. “That means the region is spending over $100 million annually on managing a pest infestation we might have been able to prevent.”

The report also outlines how indirect costs are spread across the economy. Primary examples are the cost of government to respond to AIS, and the cost of regulations developed in response to AIS.

Other economic costs associated with AIS include decreased productivity caused by resources that must be committed to dealing with the impacts of AIS, like removing zebra mussels from water intake pipes and reduced demand for goods and services, such as fewer tourists or fishermen at popular destinations due to impacted fisheries or beach closures.

“We’ve long known in the conservation community that AIS causes a significant disruption to species in the food chain, but it’s important to be able to quantify that damage beyond environmental impacts into those that affect our economy,” said Rich Bowman, The Nature Conservancy’s director of government relations in Michigan and the Great Lakes. “This is not just an environmental problem, it’s an economic one, too.”

States across the basin are spending significant financial resources already on maintenance, control and prevention of AIS. According to the report, the state of Wisconsin spent more than $12 million on AIS in 2009 and 2010, while Michigan spent about $3.1 million.

The AEG report highlights in particular the impact on power plants, which is estimated at spending $130 million annually to remove AIS from 106 plants that utilize water from the Great Lakes. For example, zebra mussels have become such a problem for power generation that in 1989, the Detroit Edison plant in Monroe – the largest fossil-fuel plant in the world – had to shut down operations for three days to clean their intake pipes.

“Controlling aquatic invasive species doesn’t immediately come to mind when you think about the job description for a CEO, but that’s a reality for me and many other major business leaders today,” said Gerry Anderson, president and CEO of DTE Energy. “It affects our bottom line and is another area that needs attention and management to effectively operate our assets.”

According to the report, the largest industry affected by AIS in the Great Lakes is tourism and recreation, which is responsible for employing more than 90,000 people in the region, generating $30.3 billion annually in revenue. Costs range from monitoring and controlling AIS to lost revenue from beach closings affecting hotels, restaurants and other tourism-related businesses.

AIS-related costs are not just relevant to businesses, but also to consumers. Cottage owners in Ontario spend an estimated $355 for each household to install a water filtration system to combat infestations of quagga mussels.

The economic impact of new AIS entering the Great Lakes are particularly troubling, Asian carp (bighead and silver carp) are the most recent, alarming threat because of their unknown effect on the Great Lakes food chain and, as a consequence, to industries like commercial and sport fishing. In the Mississippi River, Asian carp agitated by the sound of passing outboard motors have been known to leap from the water, causing physical harm to people and damage boats and equipment.

“As new AIS invade the Great Lakes, new costs will accrue, additional resources will be used, and new initiatives will be needed,” Rosaen said. “Preventing the spread of new AIS into the Great Lakes would benefit each state.”

The Nature Conservancy is a global conservation organization dedicated to conserving the lands and waters on which all life depends. Guided by science, we create innovative, on-the-ground solutions to our world's toughest challenges so that nature and people can thrive together. We are tackling climate change, conserving lands, waters and oceans at unprecedented scale, and helping make cities more sustainable. Working in more than 65 countries, we use a collaborative approach that engages local communities, governments, the private sector, and other partners. To learn more, visit www.nature.org or follow @nature_press on Twitter.

The Nature Conservancy is a nonprofit, tax-exempt charitable organization (tax identification number 53-0242652) under Section 501(c)(3) of the Internal Revenue Code. Donations are tax-deductible as allowed by law.